In big solar deal, SunEdison buys Vivint for $2.2 billion

SunEdison, which has its solar operations in Belmont, is buying Vivint Solar, the nation’s second-largest residential solar company.

SunEdison, which has its solar operations in Belmont, is buying Vivint Solar, the nation’s second-largest residential solar company.

Photo: Susana Bates, Special To The Chronicle

Photo: Susana Bates, Special To The Chronicle

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SunEdison, which has its solar operations in Belmont, is buying Vivint Solar, the nation’s second-largest residential solar company.

SunEdison, which has its solar operations in Belmont, is buying Vivint Solar, the nation’s second-largest residential solar company.

Photo: Susana Bates, Special To The Chronicle

In big solar deal, SunEdison buys Vivint for $2.2 billion

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SunEdison on Monday reported a $2.2 billion deal to buy Vivint Solar, the nation’s second-largest residential solar company, in a move that ratchets up competition in a fast-growing industry.

The cash-and-stock transaction instantly expands SunEdison’s presence in the residential solar market, which had been a weak spot for the company. And it gives Vivint more resources to take on industry leader SolarCity Corp., Elon Musk’s solar company based in San Mateo.

Company executives said Monday that the deal would help Vivint and SunEdison expand across the country, as well as overseas.

“It shows you that now renewables have entered a time when they’re not a toy anymore,” said SunEdison CEO Ahmad Chatila, in a conference call Monday. “It’s a real business, it’s a large biz that can attract a significant amount of investment.”

The move marks SunEdison’s latest big acquisition as the company transforms itself into a developer of numerous kinds of renewable power. Last year, the company agreed to buy First Wind Holdings, a wind farm developer, for $2.4 billion.

SunEdison’s divisions and subsidiaries manufacture silicon wafers and solar modules, as well as develop large-scale solar and wind facilities. The company’s corporate headquarters is located in Missouri, while its solar operations are based in Belmont.

The Vivint deal gives SunEdison a residential solar unit noted for its rapid growth. Starting just four years ago, Vivint has seized 13 percent of the U.S. residential solar sales and leasing market, installing enough home solar arrays last year to generate 155 megawatts of electricity. Vivant’s executives, including CEO Greg Butterfield, will now join SunEdison.

“This is the best cultural fit and best strategic opportunity I’ve ever seen,” Butterfield said Monday.

The solar industry has undergone waves of consolidation before, most notably among the “upstream” companies that manufacture solar cells or panels. The worldwide plunge in solar panel prices that began in 2008 forced many companies to sell themselves or their assets to larger rivals.

In contrast, the “downstream” solar companies that sell, lease or install solar arrays have used acquisitions to fuel growth, not merely survive. SolarCity, for example, has purchased smaller companies that make solar modules and racks, as well as a solar marketing company.

“The big companies are trying to achieve scale and full integration,” said Shayle Kann, senior vice president of GTM Research. “In the manufacturing sector, the consolidation was born out of total necessity, because their margins were crashing and they were trying to stay afloat. That’s not happening here.”

Under the terms of the deal announced Monday, Vivint stockholders will receive $16.50 per share in a combination of cash, SunEdison stock and SunEdison convertible notes. That’s more than a 50 percent premium above Vivint’s closing price on Friday of $10.88. The acquisition requires the approval of Vivint stockholders to take effect.

SunEdison will fund the cash element of the deal, in part, by selling Vivint’s existing portfolio of solar arrays to SunEdison subsidiary TerraForm Power for $922 million in cash. SunEdison also will use a $500 million loan from Goldman Sachs Bank USA.